Small pelagic fishes off southern California exhibit interannual variations in the regions they occupy. An enhanced understanding of these fluctuations could improve fisheries management and predictions of fish's responses to climate change. We investigated dynamic height as a variable for identifying the spawning habitat of northern anchovy (Engraulis mordax), Pacific sardine (Sardinops sagax), and jack mackerel (Trachurus symmetricus). During cruises between 1998 and 2004, dynamic height was calculated from temperature and salinity profiles, while fish egg concentration was measured with obliquely towed bongo nets and the Continuous, Underway Fish Egg Sampler. Dynamic height ranged between 68 and 108 cm, with values increasing offshore. The greatest probability of encountering anchovy, sardine, and jack mackerel eggs occurred at dynamic heights of 79–83 cm, 84–89 cm, and 89–99 cm, respectively. Four mechanisms were proposed to explain how dynamic height affects egg distribution: (1) dynamic height is a proxy for upper water column temperature and salinity, which are known to influence spawning habitat. (2) Low dynamic heights are indicative of coastal upwelling, which increases primary and secondary productivity. (3) Egg concentration is greater at dynamic heights coincident with geostrophic currents that transport larvae to favorable habitats. (4) Eddies delineated by dynamic height contours retain eggs in productive habitats. To evaluate these mechanisms, a generalized linear model was constructed using dynamic height, temperature, salinity, chlorophyll, zooplankton volume, geostrophic currents, and eddies as independent variables. Dynamic height explained more variance than any other variable in models of sardine and anchovy spawning habitat. Together temperature, salinity, and chlorophyll accounted for 80–95% of the dynamic height effect, emphasizing the importance of the first two mechanisms. However, dynamic height remained statistically significant in the models of anchovy and jack mackerel spawning habitat after considering the effects of all other variables. Dynamic height shows promise as an ecological indicator of spawning habitat, because it integrates the effects of multiple oceanic variables, can be remotely sensed, and is predicted by ocean circulation models.